In following a theme of change, let’s take a look at a twist to anti-poverty efforts: providing regular cash payments to those in need. This concept played a prominent role in the recent third round of coronavirus relief. The American Rescue Plan contains several provisions to help parents. Among them is an expansion of the Child Tax Credit for 2021 whereby eligible parents (based on income) will receive direct payments of $3,600 for kids ages 5 and under and $3,000 for children ages 6 to 17.
These direct payments, however, are rife with controversy. There are many concerned these dollars will encourage parents to pull out of the workforce.
Enter SEED (Stockton Economic Empowerment Demonstration). Through a partnership with the Economic Security Project the city of Stockton, CA offered people in need what they needed most: cash. SEED launched February 2019. 125 people were randomly chosen from low-income census tracks to receive $500 monthly, to use as they please. These individuals were provided guaranteed income for two years. The only mandate was the project’s research team could collect data designed to understand the benefits and harms of direct cash payments. Participants could withdraw from SEED at any time.
Research, via a randomized control trial, sought to answer these questions: How does guaranteed income impact income volatility? How do changes in income volatility impact psychological health and physical well-being? How does guaranteed income impact future selves?
Preliminary findings for the first year (February 2019- February 2020) are in. Here is what they learned:
Income levels month to month are steadier with the guaranteed dollars.
The “no strings attached” cash payments enabled recipients to obtain full-time employment.
Recipients were healthier with less depression and anxiety.
The payments provided a “peace of mind” that allowed people the space to think about their future, new opportunities, setting goals, and taking risks.
As one recipient commented, the dollars allowed her to buy groceries which eliminated the need for multiple visits to food pantries each month to feed her family. This change gave her back time and gave her options.
Think back on your own lives as you were starting your working life and careers. Did you have someone helping with daily living expenses such as rent or groceries? And if that wasn’t an option, how would your life be different?
A bit of food for thought. This blog is inspired by the Nonprofit Quarterly’s article, Stockton Study Shows Power of Universal Basic Income Support written by Martin Levine and published March 17, 2021.
Image by Daniel Cheung @danielkcheung